Despite New Zealand implementing a mandatory four week lock down due to the COVID-19 pandemic, the application of employment law has not changed. The effects of the lock down have impacted the majority of businesses in New Zealand. Many businesses that are not essential have been forced to close down for the duration. Many of those that are essential services have seen a significant downturn in business. In the current circumstances, many employers will be exploring ways to reduce expenses in order to survive in the long term. This includes reducing hours of staff and, in some cases, redundancy and closure.

It is important to note that despite granting of the government subsidy, provisions within employment agreements must still be followed.

Agreed hours of work

If an employment agreement states the number of hours an employee is to work, the employer must pay the employee for that number of hours. Additionally, where hours of work are set, the employer may not cut them without the employee’s consent. Where agreements provide that hours may be changed, the employer still owes a duty of good faith toward the employee and should act fairly toward them in the circumstances.

Taking leave

Annual leave may be taken immediately if it is agreed to by both parties. During this time the employee should be paid their usual entitlements in accordance with their employment agreement. The parties may also agree for the employee to use their sick leave if annual leave has been used up. However, an employer cannot require an employee to take leave immediately or without pay. An employer must give an employee 14 days’ notice that they require annual leave to be taken and this must be after proper consultation with the employee.

Income

The Wages Protection Act requires employers to pay their employees in full and without deduction on every date the employee is usually paid. This means employers cannot delay payment due to the pandemic or the lock down measures.

This also means that employers cannot unilaterally cut employee’s remuneration. Nor can employers require their employees to sign new contracts with lower pay rates or altered terms without their consent. Employers and employees may however negotiate in good faith. If both parties agree to any changes, they should be recorded in writing and signed to avoid any future disagreements.

Redundancies

Some businesses may simply be unable to maintain their current workforce despite the government subsidy. In this case, the correct redundancy process must still be followed. If the outcome is redundancy, those employees affected will still be entitled to work or be paid for any notice period and redundancy entitlements under their employment agreement. Employers may not use redundancy under the pandemic or lockdown as a reason for dismissing staff immediately or without entitlements.

 

If there are concerns surrounding practices by employers, uncertainties about provisions in employment agreements, or what the correct processes to follow are during the lock down, it is advisable to consult a professional experienced in this area.

 

Alan Knowsley
Employment Lawyer
Wellington


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